San Jose looking for new convention team

In a unanimous vote on Tuesday, San Jose City Council members said enough with the way Team San Jose is doing business.

The council voted to put out a request for proposal (RFP) for management of the city's convention center and performing arts theaters and take a hard look at what other organizations have to offer.

Councilwomen Rose Herrera put it bluntly. "If we were the private sector we would be asking for resignations, not going out for an RFP."

Time has run out for Team San Jose, which has racked up a long list of concerns and debt.

For starters, it is over budget and in default by $750,000. The nonprofit has drained down the fund it taps into from $10.5 million in 2009 to $5.3 million by the end of 2010.

That was of grave concern to Mayor Chuck Reed who said the city is relying on a $10 million cushion going into 2011, as San Jose goes forward with its $120 million convention center renovations.

Reed acknowledged that he and former councilwoman Cindy Chavez were the authors of the 2004 Team San Jose model that put the Convention and Visitors Bureau under the same umbrella with downtown hospitality and arts operations, but he now admits it's time to reconsider.

"We need a competitive process and looking at the last couple of years it's clear we were not on the right course," he said. "I don't think we have been given the respect we deserve with this financing model."

Reed doesn't want the city to be treated like a limited partner in the operation. He wants the city to be in a decision-making position with equal say. That's how it should be when you consider it is the city that's funding Team San Jose.

The city has been more than generous in its response to Team San Jose actions. Like a parent who keeps giving a child more allowance money even when he runs out. It has subsidized exhibits that ended up as non-moneymakers. Most recently it was the Genghis Khan show, which the city assisted to the tune of $250,000.

A particular thorny item that got Councilman Sam Liccardo peeved was an audit that showed big bonuses being handed out to executives and non-executives of Team San Jose just three months after CEO Dan Fenton was told the nonprofit was over budget by $950,000. Even after Team San Jose reduced salaries by 5 percent to trim costs it took them back up by 2 percent later on.

Well, you have to blame a lot of people and parties for all of this. The board of directors for Team San Jose looks like it was completely dysfunctional.

Chuck Toeniskoetter, who is now on the Team San Jose board, acknowledged that a 28-member board that met quarterly was ridiculous. Toeniskoetter, a well-known and respected developer in Silicon Valley, said, "We are working to change all that. The board is down to 15 and meets monthly."

But a lot of damage has been done and Team San Jose's credibility is at an all-time low.

Councilman Pete Constant who was the liaison between the city and Team San Jose said, "I need to know we have the best model going forward and the only way to do that is going through the RFP process. We need to explore everything."

Liccardo agrees. "I think we should be open to where the market takes us. We need to recognize that there are other models out there that can provide better economic results for the downtown as well as improve out operating revenue."

Liccardo also doesn't think one manager, like Fenton, should be wearing all the hats on the convention center, as well as facilities that have nothing to do with the convention center. It just doesn't make sense, he said.

If you look at the last three to four years and compare San Jose to six other comparable cities in the state, Liccardo says San Jose is dead last in convention bookings.

"We can't blame the economy because these other cities are in the same economy," he said.

But he, too, admits the fault lies squarely on the city council's shoulders. "The reason there is no market discipline is because there was so much political cover for these organizations and that political cover was provided by labor and the council. So the nonprofit could do no wrong."

That political cover as of Tuesday has been lifted. The city is doing what it should have gone a year ago, if not sooner. It is going out to bid for the best operator with the soundest model to help rebuild the city’s convention center business.